The housing market crisis in America
[QUOTE='ryanator]What Blackrock is doing is unethical.
[/QUOTE]There's damage control articles from middle of last year on this saying that BlackRock isn't the real problem, so who knows, but the housing market is ruined by flippers and investment firms. One major side effect of a free market I guess.
[/QUOTE]There's damage control articles from middle of last year on this saying that BlackRock isn't the real problem, so who knows, but the housing market is ruined by flippers and investment firms. One major side effect of a free market I guess.
WIll post this here but talking with father-in-law he said home bidding is basically like an auction now. You call in saying say 450,000 to be told some big spender offered 550,000. THose big spenders are investment groups with large amounts of money basically buying homes up to rent or profit from. Really puts a hurt on those just wanting to actually buy a home at an affordable price and live in.
[QUOTE='C Pav]WIll post this here but talking with father-in-law he said home bidding is basically like an auction now. You call in saying say 450,000 to be told some big spender offered 550,000. THose big spenders are investment groups with large amounts of money basically buying homes up to rent or profit from. Really puts a hurt on those just wanting to actually buy a home at an affordable price and live in.
[/QUOTE]Funny you mention, I was just talking to a realtor last night. He said he's guessing the housing market it going to crash pretty hard. He's putting money aside to buy more rentals when it does.
[/QUOTE]Funny you mention, I was just talking to a realtor last night. He said he's guessing the housing market it going to crash pretty hard. He's putting money aside to buy more rentals when it does.
I put some time putting this together, but am just a regular person with an opinion, hopefully the charts and stats below help other form a better picture of things.
As much as I wish house prices would go back to normal, in this case meaning income/house price ratio of around 1:4-5 (below), there's just too many variables and global events/competition causing prices to increase significantly and stay there.
Below is a current income/price historical chart for the US, notice we are in uncharted territory, but things have changed for the US economy, it has gone to crap, and we have given a lot of our power to other countries, which also have large investments and interest here. Also, a lot of funny money is floating around, shifting hands (mostly among the wealthy themselves - causing wealth condensation). Also, our administration has no interest in common sense and protecting our own people.
Let's look at several factors.
With all of the above, the whole economic game seems to have changed so past performance can't predict future results. Look at all the stock market "experts" getting it wrong all the time, we are living day to day in an overwhelming too-much-information connected world.
As much as I wish house prices would go back to normal, in this case meaning income/house price ratio of around 1:4-5 (below), there's just too many variables and global events/competition causing prices to increase significantly and stay there.
Below is a current income/price historical chart for the US, notice we are in uncharted territory, but things have changed for the US economy, it has gone to crap, and we have given a lot of our power to other countries, which also have large investments and interest here. Also, a lot of funny money is floating around, shifting hands (mostly among the wealthy themselves - causing wealth condensation). Also, our administration has no interest in common sense and protecting our own people.
Let's look at several factors.
- Demand is very strong and likely to stay in place in our always increasing population (assuming we don't have a mass die off and baby boomers are not going to affect this).
- Mortgage rates rising - bad for borrowers, and I don't think this will have a significant drop in home prices, they will flatten, but the huge increase will only see a slight decrease if any. For cash buyers, doesn't matter if prices don't drop back to normal. Have fun buying at high prices and paying property taxes and maintenance on those.
- Construction material - High prices mean less new houses being built and the value of current homes are more valuable because they are made of that same material. This further lowers supply compared to demand.
- Analysts are saying to look at house price-to-rent ratios per area (median home value/median annual rent) as a key to if we are in a housing bubble. Generally a 1:15 or less means it's cheaper to buy than rent. Anything at or greater than 1:21, it's expensive to buy vs renting. Some cities have always been one way or the other.
Below is a chart that I found showing this in context of an index where it's normalized to the year 2006 at 100 (not the ratio's above, but to compare to the year 2006, as many should know as our last housing bubble). Notice we are higher in 2021, and have gone higher yet now.
With all of the above, the whole economic game seems to have changed so past performance can't predict future results. Look at all the stock market "experts" getting it wrong all the time, we are living day to day in an overwhelming too-much-information connected world.
Well the slowdown is starting with the raising of rates...
https://www.cnbc.com/2022/05/24/sales-of-newly-built-homes-fall-16percent-in-april-as-prices-soar.html
https://www.cnbc.com/2022/05/24/sales-of-newly-built-homes-fall-16percent-in-april-as-prices-soar.html
[QUOTE='jmanz]Well the slowdown is starting with the raising of rates...
https://www.cnbc.com/2022/05/24/sales-of-newly-built-homes-fall-16percent-in-april-as-prices-soar.html
[/QUOTE]Laughs in Montana laughter.
https://www.cnbc.com/2022/05/24/sales-of-newly-built-homes-fall-16percent-in-april-as-prices-soar.html
[/QUOTE]Laughs in Montana laughter.
